China SME financing issues and public policy analysis

Summary: SME financing is well known, but have explained the cause of the problem and measures are still lacking a point of view of both economic analysis and policy analysis, emphasizing the development of SME financial support system, not only shows the current development of SMEs in relatively weak position, played the importance of the role of government, from the micro-level solutions to SME financing and the demand for financial services.

Keywords: SMEs, financing, financial support system

First, from an economic point of view because of financing difficulties for SMEs to re-express
SME financing is well known, both the causes involved on their own reasons, but also the external environment of many restrictions. But in the analysis are ignored the economic significance of SMEs to financing difficulties, such, this article will first "SME financing" from the theoretical point of re-presentation.

(A difficult nature of SME financing - market failures
Market mechanisms in allocating resources play a fundamental role, and any failure of market mechanisms are derived from the goods or services the supply side and demand-side behavior of the SME financing regardless of the manner in which, in essence, belong to the problem of market transactions, if market mechanisms (mainly the price mechanism into full play the role of money demand and supply side will be able to deal on financing conditions and completion of financing activities in the real market transactions, capital providers need to consider the risks of investment income, and capital requirements you need to consider financing costs when funding providers who refuse to invest in commercially viable projects to fund, then the supply side market failures in capital, when the side of the business as demand for funds due to their own reasons, can not properly grasp the access to financing opportunities, the market failure in capital needs if the SME financing market is perfect, that is, there is no asymmetric information, no transaction costs, there is no definition of property rights hinder trade and so on, then the market will follow their own logic to complete SME financing market transactions, not a "SME financing difficulties". needs to be noted is that in market equilibrium, there is less than the equilibrium price of the financing needs is not the perspective of economics effective demand, not simply classified as "SME financing difficulties" in the example based on the above analysis, "SMEs financing" definition can be understood from the following two aspects: First, the SMEs can not compete effectively and national savings flow other financial resources, or funding requirements of SMEs can not obtain a valid and effective supply, and second, the market can not effectively guide the allocation of financial resources for small and medium groups.

(B SME financing market failure analysis
1. SME financing market itself is missing. The planned economy era, China did not build a modern financial system, the SME financing market does not exist, the market will be impossible to play the role in resource allocation reform and opening up, with the financial restructuring, the bank initially swept all financial activities, and for the slow development of SME finance stock market or non-existent.

2. Two reasons leading to the market segmentation of Chinese SMEs is mainly composed by non-state economy, including township enterprises, urban collective enterprises, private individuals and foreign-funded enterprises in the planned economy, public ownership is the sole economic foundation of socialism economic development objective is to gradually eliminate private ownership, the extinction of small-scale production of capitalism. only after the gradual establishment of market economy, private economy, social status was improved, its legal status has never legitimate to an important component of the socialist market economy part but including small and medium non-state economic and social discrimination can not change overnight, thus, the SME market segmentation has become the ultimate victims, even if the high feasibility of the project, the SME financing market also have to pay higher financing costs, according to the different nature of market segmentation can lead to government intervention into the market segmentation, market segmentation itself into two. (1 due to government intervention in market segmentation. In most cases, the government's preferred allocation of financial resources is not conducive to small and medium enterprises in the direction of government policy, the banks, the stock market have chosen to state-owned enterprises as the main lending portfolio. excessive government intervention, market mechanisms will be compressed space, the single market will cease to exist, in In this case, even if a country has a complete modern financial system, financing of SMEs will be widespread, which is also the mid-1980s to late 1990s, mainly due to financing difficulties of SMEs in China (2 markets to split their present large-scale enterprises, SMEs in China is relatively widespread lack of credit and asset-backed, and the average life expectancy is short, the lack of stability and industries are mostly concentrated in traditional industries, technology development capacity, which is the traditional goal of banks - - to improve profits, the goal is to prevent the risk of contradiction, and for the Government to improve the benefits of SME lending is positive, because the development of SMEs provide employment, economic development, increase tax revenue in this case, inevitable that only some people's needs are met, the other person to pay again even if the high price (the interest rate can not be met, a loan applicant needs only partially met, the other was rejected. Stiglitz and Weiss proposed that "credit rationing" (credit rationing.

3. Defects weaken the foundation of property rights trading market, if the financing difficulties of SMEs to find "deep-seated reasons", none other than the non-property rights. And clearly defined property rights (legal protection is the basis of market transactions, the SME financing market in property rights issues related to to two aspects: First, the SME's own definition of property rights and property rights protection, and second, lenders, creditors, investors and other capital supply side of the definition of property rights and protection. about the importance of property rights, theory and practice have provided a large number of evidence.

4. High transaction costs lead to shrinking of the market the market is not in a vacuum, "use" of market transaction costs, trading costs are too high will not only change market transactions, but also led directly to the SME financing market decline (1 asymmetric information. Whether it is caused by asymmetric information in advance of adverse selection (adverse selection, or ex post information asymmetry caused by moral hazard (moral hazard, in the SME financing market is very prominent, the practice also caused the stock price and company performance deviation from the , so that investors no longer concerned about the performance of the company, only interested in price changes, listed companies, distorted incentives, financing, efficiency greatly reduced, which also makes transferring funds investors require a higher risk compensation, which the Chinese very unfavorable labor-intensive small and medium enterprises, financing costs are too high makes the SME financing market has shrunk dramatically (2 institutional factors. institutional factors leading to the "low efficiency" to artificially increase the transaction costs of small and medium finance market in the efficiency of China Low transaction costs are likely to be on the list of large, two important evidence: first, in the credit markets, and SMEs are closely related to mortgage financing, loans, outstanding in China there is the problem of low efficiency. for real estate, chattel mortgage, the right to pledge, mortgage banks registered with the spread in 15 departments, among which the most confusing chattel mortgage registration department, a total of nine. on warrants, financial instruments, bank drafts, etc., is generally not associated guarantee registration, the second in the stock market, small and medium enterprises restructuring and listing process, only in relation to local government departments out of the text links will go through a lengthy process. the reasonableness and necessity of the program Regardless, there will be increased as long as the program SME restructuring and listing costs.

Second, to address the financing difficulties of SMEs in public policy proposals - the establishment of system of financial support for SMEs
SME financing is a micro issues, it is a macro issue from the micro-analysis, SME financing is not conducive to healthy development of SMEs, from the macro analysis, is not conducive to good development of SMEs to expand employment and economic development. Current , whether for short-term response to the global financial crisis to consider, or to promote optimal adjustment of economic structure in order to achieve long-term goal of scientific development, construction, financial support system for SMEs, public policy choices will be given a more significant practical significance, but also faced with more choices based on SME financing in China before, economics is difficult to explain, should adhere to market-oriented SMEs, the establishment of two multi-level stock market improve the financial support system.

(I insist on perfect market-oriented system of financial support for SMEs operating mechanism
Market mechanism into full play the role of China's three decades of successful reform is a fundamental experience gained in China during the construction system of financial support for SMEs in all levels of government have also stressed the need to give full play to the role of market mechanism, but For various reasons, the guiding principle in practice, there might be discrepancies in the end, should be fully aware of the following:
1 government-led or driven system of financial support for SMEs in the construction process plays an important and irreplaceable role, but this does not mean an alternative to the market by the government on the implementation of micro-level of financial resources in China Government, through the relaxed interest rate controls, provide credit guarantees, and the integration of small and medium financial institutions for SMEs within a certain period of time provides a convenient system of financial support, but the market is the key to improving SME financing system, in this context, as far as possible to play the market at the micro level of financial resource allocation, rather than on government intervention.

Links to free download http://www.hi138.com 2. To fully rely on the market the advantages of decentralized decision-making, innovative financial instruments for SMEs to improve the efficiency and relevance. Chinese SMEs complexity and diversity of groups, commercial banks should be based on the characteristics of SMEs, improve credit decision-making process, the establishment of SMEs to adapt to credit approval mechanism, expand the county branch of the authority delegated in full certificates of deposit as security for loans, full guarantee of acceptance issued by the management authority such as the right combination of credit risk characteristics of SMEs, setting up small business loan bad debt reserve system, the normal and reasonable to determine the credit loss rate, zero risk is too high to change the lending requirements, according to responsibility, rights, benefits symmetry principle, the establishment of credit marketing management incentives speed up the process of marketization of interest rates, liberalization of interest rate controls on loans to SMEs, give full play to the interest rate market mechanism to guide the flow of funds, mobilize commercial banks to support SMEs initiative.

3 further opening up the financial sector, the establishment of new private capital to guide financial services for SMEs in business development at different stages of their funding sources there are significant differences, the development of private capital in the enterprise at different stages of play does not stop to the role of the SME in the early stages of development, the relatively small size, lack of physical assets, financial records and business information accumulated, not to the formal financial channels and financial institutions to provide qualified financial information and sufficient collateral, it can not from the formal financial sector financing, while private capital is often not required to provide physical assets can also be productive borrowers to provide financial support.

4 through property rights reform to achieve decentralization of property rights, standardization of the structure of property rights, property rights and the rights of property of the public a clear and effective legal protection so that the equity-based empowerment through equity investment, equity method for SMEs to facilitating the financing, and can effectively protect the rights of lenders to improve China's SME financing market conditions of supply of various kinds of financial resources.

(B to accelerate the development of multi-level securities market system
Corporate finance and stock market investors as the carrier, the level of a socio-economic development decisions. With economic development, China's securities market is also experiencing a single level to multi-level development process, multi-level securities market and the optimal allocation of social resources have a positive role in improving market efficiency, but also the system of financial support for SMEs in the "high-end market." However, in practice, single-level market is the small and medium enterprises can not find the ideal financing, SME financing as a major factor constraining. In view of this unbalanced development of the conflict and its negative impact, accelerate the development of multi-level stock market system, should be deepened in the current system of financial support for SMEs as a breakthrough and focus.

1 accelerate the development of multi-level stock market system, high-risk equity capital to expeditiously improve the structural contradictions in short supply. venture capital as an economic development compatible with the financing mechanism, not simply that the funds to support SMEs, particularly high-tech enterprises, the reasons for its success lies in the realization of capital, technology, information and integration of human resources, the investors, venture capitalists and corporate management of the three closely together to establish a standard set of performance incentives and restraint mechanism, which greatly reduces the information asymmetry in the process of financing and agent costs, thereby improving the efficiency of the financing with bank loans, compared to venture capital has played a host of convenient banking system that has the advantages of the enterprise to monitor, standards maintained in the financing on the basis of good performance.

2. Seize the favorable opportunity to promote the accelerated development of multi-level stock market from the experience of other countries as well as financial support system for SMEs in the internal logic of looking to build multi-level stock market, the most difficult, so it appears in various subsystems and mature time at the latest. Only in this way, China to serve the SME population dynamics of the stock market for the multi-level development in the past five years has chosen a relatively stable path of development. At present, the accelerated development of multi-level stock market conditions demand full , supply conditions are becoming increasingly mature, which is mainly manifested in the following aspects: First, an SME board, the GEM, the transfer agent system, including a complete multi-level marketing system has been established, the second is based on the SME board successful operation, accelerate the development of multi-level stock market system, in regulation, risk control has been widely available and mature experience to support the third is a set of broad participation by the local governments listed training service system for SMEs has been established, Relying on this system unique in the world, China's capital market in the spread of knowledge, foster equity culture has made important achievements, and continue to have a solid foundation for further development, four in China for a long period there may be a relative surplus of capital, The international status of the RMB will continue to improve the prospects for further attract foreign long-term capital inflows into China, which means to accelerate the development of multi-level stock market system is not only loose money environment, excess capital can act as a disincentive for promoting asset prices induced by inflation role.

3. Nurture and raise the risk of market pricing power, to accelerate the development of multi-level system of the stock market to lay micro-foundation. To the risk of vision for the stock market, it is essentially a distributed within the whole society, the risk of system configuration business activities arrangement system. Enterprise Risk provides a basic reason for the existence of the stock market, but also shaped the main features of the stock market run, the stock market allocation of business risks determine their own development of the stock market breadth, depth, and business development services to the national economy penetration ability in the micro level, a lack of risk pricing has an impact on the stability of China's stock market itself, which restricts the rapid development of multi-level stock market, stock markets deepen groups of innovative SMEs the main obstacle in this sense, nurturing and increase the risk of pricing power is a multi-level stock market building a core task. Note that the ability to nurture a process of risk pricing in this process, the stock market appeared in the local problems of one kind is completely normal and should not therefore affect the positive development of multi-level stock market policy choice, and should continue to improve market risk through its own forces to create the positive aspects of pricing power advantages.

4 full multi-level stock market high-end market but also to enhance financial support for SMEs own value system, but for SMEs, particularly start-up stage of small technology companies, because of its small size, the product is not mature enough (not must be a bad product, but not into the product maturity, the risk of large, financing through the motherboard is not realistic. At present, China's securities market to small and medium single-level high-tech start-ups is not the ideal financing, venture capital is also there is no ideal exit channels, thus, restricted the growth of small high-tech enterprises and the optimal allocation of social resources through multi-level stock market, such as venture capital for a number of outstanding financial support to SMEs to promote their bigger and stronger restructuring and growth of the backbone of the national economy, not the construction of system of financial support for SMEs of all tasks, but its core mission, is one of the most optimal allocation of financial resources to reflect the requirements of the task. Links to free download http : / / www.hi138.com